The Great Spotify Mystery

The music business has set up a lemonade stand outside its house and it's giving away lemonade for free. Not surprisingly, people love the free lemonade, and the stall has drawn a large and enthusiastic crowd. The stand is called Spotify. The business justifies this because it's so easy for us to get their music for free …

[Anonymous Coward]

Rediscovery

"Most are 30 to 50, and are using it for rediscovering music"

Or trying to get hold of a CD / Album remembered from their youthful past which the music biz has in its infinite wisdom decide to take out of production.

I'm an old fogey and like my CD cases and inserts, MP3 is just a means to creating a CD. I'd pay the music biz and everyone else in the chain if they made the product available but they decided they don't want my money.

I don't know anyone of my age who hasn't got their musical tastes locked in read-only mode but if something takes my fancy I'll download the MP3's and if I like what I'll hear I'll buy the Album, traditional try before you buy, but I want at least good not crippled quality and time to reflect on what I hear.

One day the music industry may actually get round to serving their customers what they want. In the meantime there are other options for customers.

[Joe Cooper]

I'm confused

"it makes Spotify a historic blunder on the scale of MTV or iTunes."

Aren't MTV and iTunes both successful?

[Anonymous Coward]

Getcher Ponzi, hot 'n' fresh!

"It was stated that the labels own 30 per cent of Spotify through equity investments."

"But most of that money is simply being recycled in royalties."

Really? I'd say that 30% stake is doing them the world of good. The majority of the money in digital music is the music companies' -- they've clawed all the distribution and shelf costs of the old physical model into their own profits.

So it follows that the majority of Spotify's outgoings is going to a group of shareholders holding a minority stake.

I'm guessing that the majority of other shareholders were given confidence in the business model by the presence of the record companies... which puts the record companies at the top of one very lucrative pyramid, and all this "monetarization" talk is just a smokescreen of "plausible deniability".

I don't think the recording industry is going to lose....

[Anonymous Coward]

Forever blowing bubbles

First of all I think Spotify is a great product which I use all the time. The problem is, as this article states, that there is just no reason to subscribe. I have been listening to spotify on and off all day today and I can't remember hearing one ad! Way to make me want to upgrade...

It just reminds me of the dot-com bubble so much; great idea, lots of users, no idea how to make money from them.

I will be very sad when Spotify inevitably dies.

[Anonymous Coward]

Sell the details on

Does anyone sign up with anything other than a fake name and a throw away email address to these types of "service"? I certainly didn't. So what exactly will they be selling on to the record companies other than a bunch of junk.

I'm making the most of Spotify until it goes bust!

[Robert Grant]

"The business looks down on this free and easy access to its assets quite understandably."

Now that's a well-crafted phrasing.

[Anonymous Coward]

Please sign the form. We will fill in the terms later

The terms and conditions for Spotify do not say I get a license to store and play back songs on my computers. In fact such behaviour is explicitly forbidden. They do not say anything about a percentage of revenue going to musicians and song writers.

They do say they want me to download a closed source application, run it under WINE and not make any attempts to find out what it is doing. They also say they can change the terms and conditions without notice and it is my responsibility to keep up to date with those changes.

They have convinced me not to bother with their site.

[Peyton]

music industry can't do anything right

L3MONAD3 is spelled with two backwards e's, not one. sheesh

[impossimole]

Shh!

Dont tell them they won't make any money they will take away my free jukebox!

[Graham Bartlett]

Free is nice but stupid. Why not pay?

Another clue-free move from the majors. What do people really want for download? Answer: songs on all the CDs they can buy from Amazon, and all from the old CDs now delisted, available at decent bitrates (256 or above). And this at a price which reasonably reflects the costs involved.

Does iTunes do this? Nope. More than 20p a song, and I'm not doing it. Especially for older stuff like Quo, Deep Purple or Queen, I might as well buy a bargain-bin CD for £5 (or less) and get the physical version a whole lot cheaper, as well as with better sound quality (and rippable to whatever rate you want). And as the article says, the main users of Spotify are people looking up all their old favourites.

The majors have had 10 years since Napster to get a clue on digital distribution and actually *sell* us what they're sitting on and hoarding. All Spotify tells us is that after all this time, there still isn't anyone with any clout in the music industry who's figured it out - they're just lurching from one broken business model to another.

[shane fitzgerald]

deezer

deezer.com has been around for years doing pretty much the same thing. I haven't listened to my mp3 collection in years (apart from on my phone) since i started using it. Whats so great about spotify?

[Vision Aforethought]

Business model is easy...

1. As they are currently doing, insert ads into the playlist every 15 mins or so - just like radio. They can even advertise new tunes similar to ones you are listening too - as Apple's iTunes Genius does. (I object to any demographic info being shared - I want to be who I am, not labelled, but don't mind my music taste being shared with a 'puter.)

2. If Spotify listener wants to own the track, he or she can buy the DRM free file for use on their gadget(s) de jour.

3. If listener wants to have a Spotify party, with no ads, but with unlimited music, then why not allow them to buy (say) 6 hours of unlimited usage? (Buying tracks for a party is silly as you may not like all of them.)

Oh, and remember 'PONYUP', the first concept for DRM free music, possibly coming in the future.

[joe K]

@Shane

Spotify's major selling point (IMO) is the UI, its sleek, fast , intuitive and looks great. Couple to that the ease of searching for tracks and albums, the ability to create playlists, the almost instant playback , the non-intrusive ads and you see why everyone who's used it won't stop.

Its not really going to make any major dough unless they use that same tech to provide video streaming with as current a collection of film and TV shows. That's something a lot of people would pay for.

[Sabine Miehlbradt]

Ah yes...

...the two magic words

Not available (in your country)

The same answer I get when looking for music/dvds on amazon these days .

[Chris]

Another worthless opinion...

For what it's worth, I'm 23 and pay for Spotify. It does happen.

It's interesting what the supposed typical usage is - virtually everyone I know uses it for Collaborate Playlists (a genius idea in it's simplicity and simplicity of implementation) to discover new music.

I have more CDs on my shopping list now (although I accept I may be in the minority for preferring to hold the booklet and read the credits whilst listening). Like many others, my moral compass allows me download an illegal torrent for 3 plays before I feel compelled to delete or buy). *If the label can get paid at the same time then that's even better.*

What was everyone expecting from Spotify? We knew the good times couldn't last forever - of course targeted marketing was on the cards (I think a surprising number of listeners would welcome the convenience of getting merch pushed to them). Is it that hard to support them?

Bump up the ads on the free version slowly (I remember them being incredible sparse), and people will be hooked (especially if they've spent time building up their playlist).

IMHO, Spotify's biggest problem at the moment is only accepting Mastercard/Visa - not even debit cards, let alone Paypal. How are they expecting people to give them cash?

[Keith]

eh?

@deezer

I agree .. last.fm has been going for ages too ?

Is there anything new about this service ? Does last.fm make any money ?

Paris .. i'm as confused as her ...

[Anonymous Coward]

Spotify HD

I guess the current ones are 160k. If they had a HD audio streaming service which was better than CD quality e.g. studio quality. That would be a service worth paying extra for. Come on spotify :) I'd pay £10 a month for that. It's too much hassle ripping cd's in FLAC.

[David Barr]

What about Ad revenue?

I can't understand why it can't work.

Commercial radio must work - or we wouldn't have it. It's supported by "dumb" ads. The ads aren't targetted in any way, and I can't click to take me direct to the site. If I listen to lots of Prodigy, for example, when they're doing a gig near by me then Spotify ads could be targetting me by location and by my music preferences and offering me a direct link to buy gig tickets. Surely that's got to be worth more to advertisers than radio ads?

I can see Spotify becoming less pleasant to use in order to make it financially viable. I can see them, for example, putting a limit on the number of times I can listen to a particular song in a time period, with perhaps a higher limit for premium users. I can see them putting more ads in, or getting smarter with the ads. I'm fine with that if it's how I'm "paying" for the service. I can always opt out of ads and pay a monthly fee.

Spotify is what I have wanted, what my family have wanted, what my friends have wanted for a long time. If commercial radio can work then Spotify can work.

Perhaps the problem is the people running Spotify aren't particularly adept at making money from it. I'm sure commercial radio owners are.

[Andy Bright]

I don't get it

Not many people I know object to paying for their music. There are freetards everywhere of course, but I don't know many myself.

Most of the people with money, ie. those that have money to pay for music and therefore the only people the music industry should care about, buy their music from iTunes or something similar.

Some of them still buy CDs too of course, which would seem to make better sense except that CDs are now the format with DRM, not iTunes downloads. You can make your own DRM-free CDs and the only price for this, besides the music itself, is having to print out your own cover art.

So why the music industry even cares about those with no money is beyond me. Freetards are never going to buy their music, whether you give it away for free to start with or not. They have this fucked up selfish and spoiled mentality. They think the world owes them for doing nothing and paying nothing. Some are even retarded enough to think they support the very bands they rip off.

But people with actual money overwhelmingly don't see $10-$15 as an obstacle to owning music. They see it as reasonable, especially when you can often get it for much less than that if you shop around and especially when you can get it without DRM.

[Julian Bond]

It's all about the money

Graham Bartlett: More than 20p a song, and I'm not doing it.

Andy Bright: people with actual money overwhelmingly don't see $10-$15 as an obstacle to owning music.

The truth is out there somewhere between Graham and Andy. I figure there is a price that competes successfully with free and it's somewhere around 10c per track for 128Mbps and 30c per track for flac. In fact pretty much where allofmp3.com was pitching it back in the day.

Paris: Because even she knows the difference between the price of something and its value.

[James]

"Most are 30 to 50..."

"Most are 30 to 50, and are using it for rediscovering music"

My god, this is true. My dad rang me a month or so ago and said "have you seen Spotify?"

"What?" I asked.

"Spotify" he said "Like iTunes but you can listen to anything for free with very occasional ads. You should download and try it."

What the... Where did he discover this? I hadn't even heard of it. Not that I've tried it yet, though I probably should if my dad likes it...

[Grant]

Record companies - try the carrot

the pirate bay already has huge number of visitors - including me in the 30-50 age group looking for specific tracks, albums or movies - at least some of which I already own.

Instead of investing in new services like this which will take a long time to reach piratebay levels of traffic (if ever), why not try and place nice (revenue share?) with thepiratebay and/or rapidshare guys. I would reach for my creditcard to keep access to that & while it would still be p2p and 'pirated' music/movies/tv, the various media companies could at least get easy revenue - far more than they get without a login screen in front of the piratebay.

Mind you, if they had done that in the days of Napster (and people were recommending it) then they may not have got to the point of p2p and thepiratebay as it now standard. As iTunes shows (and I use iTunes & buy some tracks), just being convenient is enough for punters like me. Main reason I use torrents is that I want all the extra stuff (like obscure music from the 80's) available via p2p that is difficult to get elsewhere.

[Anonymous Coward]

music business failures...

> The majors have had 10 years since Napster to get a clue on digital distribution... they're just lurching from one broken business model to another.

Yes. The music business; wealthy rights owners, money grubbing execs and overzelous parasite lawyers have spent the last ten years in an unpopular and futile battle against a great revolution in the distribution of music.

For the first time the advent of p2p services made it was possible to access nearly all the worlds music from any internet enabled device anywhere in the world.

Rather than embrace and adopt this new musical renaissance the music industry in a blind panic have repeatedly sought to use their commercial muscle to inhibit technological advances; shutting down popular independant services through legal action and putting in place poor substitute offerings providing consumers with less choice, limited functionality, use restrictions and high prices.

Mais c'est la vie - popular socialism didn't fail, it was brutally supressed by a selfish capitalist minority with vested interests.

[John]

@vision Aforethought

"If listener wants to have a Spotify party, with no ads, but with unlimited music, then why not allow them to buy (say) 6 hours of unlimited usage? (Buying tracks for a party is silly as you may not like all of them.)"

I believe you can already do this for 99p for 24 hours (or thereabouts).

Personally I think spotify is fantastic because I get to listen to what I want to and and I don't have to pay for quite so many MP3 downloads for my daughter (I don't mind paying for music but you can only pay for Miley Cyrus downloads so many times before the boys at The Pirate Bay become very tempting).

The full subscription is more than I'm prepared to pay for what is still a stream that restircts me to listening to the material on my PC, especially when the free offering is so good. I'd seriosly consider subscribing if it was the only way to use the service though, and would probably subscribe now if it was about half the price.

I've never seen how it's likely to turn a profit though so I've been working on the assumption, though hopefully wrongly, that it won't be around for all that long.

[Anonymous Coward]

Too much cynicism

Yes, they have yet to prove a viable business model, but I don't think there is some huge conspiracy going on here. Anyone can see the actual ownership stakes of the major labels by downloading the share register from the website of the Luxembourg company registry, and the 30% figure is some way above their actual stake.

I am not an apologist for the major labels, but the author of this article damns them for experimenting with new business models, yet would presumably damn them equally for not doing so and holding on to an out-dated concept of ownership (vs. access). Ultimately, they can not renew their deals with Spotify and because nobody ever got permanent ownership of the tracks, what is their loss?

[David Hicks]

I'm a fogey...

... at the grand old age of 30.

I last used it because my mp3 player was in the other room, under soemthing, and I couldn't be bothered to find it.

If they start playing more ads or trying to charge me, or even just make the product more awkward to use, then I'll give it up. I like to buy music on CD, rip it and file it away, then I can listen to it anywhere in the world on a variety of devices.

Spotify will only appeal as long as it's convenient and free.

(That said, I have some friends who love it and pay for it, but they're not as acquisitive as I am)

[Lyndon Hills]

@Im Confused

Yes MTV and iTunes are successful but for the music business they are disasters. Music biz paid to make music videos and gave them away regarding them as promotional items. MTV plays said free material and make millions.

iTunes at least generates some money for the music business, but Apple/Jobs control the prices charged, bundling, formats, etc. Music Business has lost control of it's own products through iTunes.

[W]

Correction:

>"...it doesn't have scrobbling..." - El Reg

Not true. Spotify has Last.fm scrobbling built in.

Edit > Preferences... The first thing any self respecting individual goes to when they've installed an app or program.

"Will it scrobble?" is one of the first things I ask when considering the merits of any new media player or device. Though strangely enough, I've never got into listening to music on Last'fm.

For me, music has the following facets (listed roughly in order of how much I'm prepared to pay (per month, say)

- Forums and Blogs: conversational '2.0 social networking bit'.

- Mostly free local mags and zines and other print media (such as flyers): for generally keeping abreast of stuff.

- Radio: ambient listening.

- Last.fm: An exploration springboard based on listening habits with Foobar / Spotify / Mobbler.

- Spotify: listening to something I'm searching for specifically, that I've read about elsewhere or for listening to collaborative playlists.

- Amazon Marketplace (or sometimes a local independent): CDs ripped to MP3s.

- Live performances: of acts I know I like, or unknown acts that are playing in venues or clubs I trust.

There's only so much time available for listening to music. And so far, due to their price compared to actual CDs, bought MP3s don't get a look in in terms of prising money from me. Spotify less so. eMusic and 7 digital are nearly there. eMusics prices are appealing, but they've got a ridiculous cap on the permitted purchases per month.

Music "in the cloud" a la Spotify could be snatched away at any minute. That might be acceptable to the casual 30-50 yo listener who's just remniscing and hasn't bought more than 3 CDs from anywhere other than Tesco in the last few years anyway. But it's no good to me as anything other than a preview service.

At the end of the day, I want to know that if I've paid for the right to listen to a recording, I'll be able to go back and listen to it whenever I want.

[W]

Re: @Im Confused

And the success of MTV just shows how long the tail has been wagging the dog for.

The culture of 'MTV Cribs' is the epitome of all that is wrong with the major music labels, showing how wide the chasm between the major and indie extremes of the industry is.

[Jonny Wills]

Spotifee Spotify Spotifoe Fund

Good consolidation of the points concerning the lack of a business model, but I can't help but feel there is something they are not sharing publically.

Fundamentally there needs to be massive licensing shake-up. But first the average CD buyer-downloader who not only knows how to acquire things for free anyway - mates with hard drives, copying, library lends, file sharing sites etc, needs to be addressed over fees.

If we say that half their budget goes on sales, then that money is wasted going to streaming sites on subscriptions. Ideally you'd want the artist to be paid per play like broadcast, even if its a teeny fraction to meet the ratio of the one listener to the millions of listeners for radio/TV.

I think there needs to be a substantially recognised artist body with teeth dealing with these issues directly, and I would definitely invite Radiohead's mangement and the band to head it up. Isn't one of them involved in something like this anyway?

Jonny Wills

http://www.twitter.com/jonnywills

http://www.myspace.com/jonnywillsandthewow

[Sarah Bee]

Re: Spotifee Spotify Spotifoe Fund

Naughty Jonny using us to punt your tuneage, Dan Bowskill style. But I know musicians are struggling. I will allow it. Just brace yourself for the scorn of your fellow commentards - they're all arbiters of good taste, you know, very hard to impress.

[Camilla Smythe]

Buh Bye Jonny

"Get Flash now! In order to listen or view this content you will have to upgrade your version of Flash."

Meh? I've got version 10 installed. Can someone else tell me if it's worth enabling it...

Oh, thought not.

[passionate indifference]

your business plan is useless without one of those Gartner's quadrant chart

and it's been challenging to build a suitable one for digital music

I believe there needs to be a VIP Customer service for people who are happy to buy digital music, in the similar way to your loyalty schemes for frequent fliers trying to squeeze value out of business flying. Perhaps included in subscriptions should be free merchandise, higher quality downloads, exclusive entry/preferred entry to gigs etc.

I especially like the live music scene - I think there's huge amount of scope in that. Why not have a Spotify Subscriber's bar at your next music festival? Or your own entry queues?

What's IMDB Pro's business model?

Mine's the coat with Qantas Frequent Flyer on the lapel

[David S]

Commercial Radio?

My local commercial radio station(s) seem to be doing okay on advertising revenue. Why should it be impossible to believe that a radio-like-service which allows you to choose your playlist and serves you the occasional, unobtrusive and (key point here) targeted advert shouldn't also be ale to make a go of it? Especially since they don't have to pay that annoying git with the irritating voice to talk over the beginning and end of all the songs?

Okay, nobody in commercial radio is making internet-bubble quantities of virtual money, but they've been going for a while. Might Spotify's model be along similar lines?

I like Spotify. It provides some interesting background audio for my working day (when I'm working from home, natch - wouldn't want to subject colleagues to "Jollity Farm"...) and gives instant gratification to those "what was that tune" moments I get from time to time. I haven't listened to my MP3 collection in ages. They may need to make the adverts a little more obtrusive, in fact, because so far I haven't felt the need to subscribe.

I know. Freetard.

[Trevor]

Spotify is not commercial radio

People who say commercial radio is doing OK so there's no reason why Spotify won't be OK do not understand the different licensing models involved here.

I work in the music biz, and can tell you the major labels see on demand streaming and radio very differently, and charge very differently. An on-demand stream will cost upwards of 1p, whereas radio will be a small fraction of that. Therefore, for the Spotify ad-funded model to work, there needs to be significantly more ads than you hear on radio, and that is the way it has to be until the labels change their licensing model. Either that, or Spotify lose money hand over fist.

[Peter Hood]

Splorf

There you go again, spoiling my fun. How long will my account live after this devastating deconstruction of them?

[Camilla Smythe]

Yes... To all of the above.

But I know something you do not so that makes you sort guessing that you might be some sort of stupid with the opportunity for denial.

[David S]

@Trevor

Thanks for that. I did have a sneaking suspicion that I'd been over-simplifying matters.

Slightly annoying that Spotify is threatened while some pretty dire spivs get to continue to pump their drivel over the airwaves, but there it is...

[Anonymous Coward]

Commercial Radio Doing Well

David S, commercial radio is not doing well in the UK. It's doing terribly with stations merging, closing, or being renamed Heart. Things were bad before the recession and had been for a number of years. But things are now so bad that some stations are actually going off-air for good. In the past if a station went bust someone would jump in and buy it up because a broadcast license was seen to have a value. Not any more. Just ask the people of Stroud, Ely or the Welsh Valleys what's happened to their local stations in the past year or so. All they now have is static.

In a number of other cases stations are changing hands on an almost weekly basis and the cycle will continue to repeat itself (station goes bust, gets rescued, goes bust again, gets rescued in the case of one station up North).

[Anonymous Coward]

Sing it brother!

"The hard part is actually getting people to pay the quid for a song they know will be in the same place in Spotify tomorrow."

Amen.

And I don't mind having to run it under WINE, because you can limit what WINE has access to.

[Dick Emery]

Spotify a virus?

http://vil.nai.com/vil/content/v_157317.htm

http://getsatisfaction.com/spotify/topics/virus_in_spoify_exe_on_download

[David S]

I shouldn't laugh...

but...

"...or being renamed Heart..."

made me.

[Adam Foxton]

Alternative business model

free ad-infested low-rate music, premium content (high rate music, music videos in youtube-quality, no / minimal ads, etc) for a free, ultra-premium content for a higher fee (no ads, HD music videos, DVD-Audio quality sound, unlimited access, etc). And a no-subscription download with a large increase (i.e. £1 per track for high-rate stuff, £10 for DVD quality audio and an HD music video, £12 if it's downloaded as an iso, ready for playing on a DVD or Blu-Ray disc, etc)

Now THAT could almost certainly turn a profit with a decent catalogue of available music. Freetards get their free music, those who really love a song can either get a Premium subscription of pay a premium price to get the song (with guaranteed privacy). And it could spread out into TV as well with no issues.

Delivery method would be a bank of servers constantly seeding with a bittorrent style system lowering the amount of bandwidth required for "peak" downloads.

[Toastan Buttar]

Re: Spotify a virus ?

Nope. False positive from McAfee.

http://service.mcafee.com/FAQDocument.aspx?lc=2057&id=TS100682

[Mike VandeVelde]

Spotify?

Never heard of it. But if it pisses off Andrew Orlowski, it must be worth looking into. D'oh, not available in Canada. So sad, from the article it sounded so promising: labels interested in the kind of data they could have gotten from Napster in the first place, making money off things that actually cost money like concert tickets & t-shirts instead of pushing bits around, using exclusives & whatnot for attraction, unobtrusive ads for further income, etc. And then I find out it's just a glorified radio station anyway, and one that needs some special proprietary client download?!? I'll just stick with eMusic then, the closest thing I've found to value for money in the legal music business today. Nice try everyone.

[Anonymous Coward]

media

people are really daft at the moment. All you have to say is

'we are in a revolutionary new time ...' blahblah... mention democracy a bit. How no one will pay or anything, the only way to make money is by monitoring user data and advertising - ITV made a real success with that.... -.

Anyone who questions this 'doesn't understand the time we are living in'

Also, how long before the 'new media' is no longer new, it seems in the past few years the 'old media' is intent on making it exactly the same as it ever was.

[Anonymous Coward]

Spotify: not good enough

None of these "listen for free on the internet" schemes fit my needs. I want to OWN the music I listen to. Yes, it's an outdated concept (I am in this magic 30 to 50 age bracket, now get off my iLawn 2.0...), but I'm the one with the money and a wish (no, NEED) to spend it.

I recently gave in and bought some tracks from 7digital. New tracks (mainly remixes) that for some effed-up reasons weren't available on CD. What did I find? Several of the tracks were that damned WMA format (kinda my fault, I wasn't paying close attention), and a couple of the mp3s had been ripped incorrectly and had skips/distortion in them! I'll not be buying mp3s over the web again.

If there are any record company bods reading this: you are losing THOUSANDS OF POUNDS a year from me. Please let me buy the singles and albums I want on CD (and not these horrid "print on demand" abominations), and you can have my money. If you don't want to do that, then sod you, my money's going on DVDs.

[James Boag]

Not Just the Music Industry !

Remember Home Fucking is killing Prostitution !

[Anonymous Coward]

old fogeys

Ooops.

Yes, I'm 44 and I've been listening to stuff I hadn't listened to in 25-30 years.

Saw a review on The Times/Gaurdian/Telegraph (which is presumably why older people are using it - because young people don't give a toss about the world and so don't read newspapers).

It's not the pricing we object to but the endless parade of talentless cretins and over sexualised children singing songs they didn't (couldn't) write, backed by people old enough to be their parents.

The music industry is geared around what will sell the most - everything else is largely ignored.

If they ever go back to creative expression and the fair promotion of other people's talent I'll join in again - till then.

Vive la torrent!